2005年-世界发展银行全球_India___Rajasthan_State_Financial_Accountability_Assessment_94页_6mb

India Rajasthan: State Financial Accountability Assessment Summary

Core Content

This report provides a comprehensive assessment of the financial management and accountability system in Rajasthan, India, conducted by the World Bank's South Asia Region Financial Management (SARFM) task team. The assessment focuses on the state's public financial management (PFMA) system, identifying key areas for improvement and reform.

Main Objectives

• To support the reform efforts of the Government of Rajasthan (GoR) by identifying opportunities for more effective financial management and control over public resources.
• To evaluate the current state of financial management across various dimensions, including budget preparation, approval, execution, internal control, government accounting, financial reporting, external audit, legislative scrutiny, and public access to financial information.
• To align Rajasthan's financial systems with international best practices, particularly those of the International Federation of Accountants – Public Sector Committee (IFAC-PSC) and the Government Accounting Standards Advisory Board (GASAB).

Key Findings

1. Budget Preparation, Approval, and Execution

• The system design is sound, with well-defined procedures for budgeting and implementation.
• Budget preparation has improved, especially in estimating tax revenues since 2003-04.
• However, there is a significant compliance gap, including:
  • High incidence of supplementary grants (over 80% of grants and nearly 25% of amounts involved).
  • Lack of zero-based budgeting and reliance on incremental budgeting.
  • Inadequate performance budgets and poor linkage with development outcomes.
  • Inconsistent monitoring of expenditure, leading to frequent overspending.
  • Need for more comprehensive budgeting that includes central government transfers and subsidies.
  • Inadequate revenue administration and arrears in assessments and realization of government revenues.

2. Internal Control and Internal Audit

• Cash transactions are well-controlled, but internal control does not focus sufficiently on monitoring the physical progress of development projects.
• Performance indicators for line departments and schemes are not fully articulated.
• Internal audit lacks defined standards, plans, and a strategic approach.
• Audit responses are delayed, and the impact of internal audit is marginal.
• A risk-based audit approach is recommended, with greater focus on high-risk areas such as public works, education, and power.
• Integrated internal audit systems, reporting directly to Administrative Secretaries, are suggested for improved effectiveness.

3. Government Accounting and Financial Reporting

• Rajasthan has made progress in computerization of treasury operations.
• The state follows a traditional single-entry cash-based accounting system, which does not fully meet international standards.
• The system lacks a statement of accounting policies and coverage of economic entities.
• Timeliness of account publication is an issue, with annual accounts not being tabled in the legislature immediately after the financial year closes.
• Suspense accounts and large-scale transfers to deposit heads (personal ledger accounts) undermine the accuracy and completeness of financial records.
• A shift to accrual-based accounting is recommended to align with Central Government policy and improve the quality of financial reporting.

4. External Audit and Legislative Scrutiny

• External audits are conducted regularly by the Comptroller and Auditor General of India (CAG) and cover state financial transactions.
• Audits of public sector undertakings (PSEs) are often qualified and delayed, indicating significant fiduciary risks.
• Performance audits are gaining importance, with a focus on internal control and accountability.
• Legislative scrutiny is inadequate, and the GoR is encouraged to enhance its dialogue with the Accountants General and improve the dissemination and follow-up of audit results.

Key Recommendations

• Reorient financial management towards development outcomes: Shift from cash-based to outcome-based budgeting and improve performance reporting.
• Strengthen departmental accountability: Enhance the role of financial advisors and ensure cost-effective service delivery.
• Improve internal audit systems: Introduce a risk-based approach, define audit standards, and integrate audit functions with management information systems.
• Modernize accounting systems: Transition to accrual-based accounting to align with international standards and improve transparency.
• Enhance public access to financial information: Develop a roadmap for institutional reforms, including capacity building in budget preparation, revenue research, and e-governance.
• Establish a nodal monitoring unit: Coordinate the implementation of reforms and ensure timely follow-up on audit findings.

Conclusion

The report highlights a mixed overall picture, with substantial fiduciary risks and a compliance gap that undermines the effectiveness of financial management and accountability in Rajasthan. While the state has made progress in some areas, such as computerization and budget estimation, there is a need for systemic reforms to align with best international practices. The GoR is encouraged to take a coordinated approach, supported by the Centre for Good Governance (CGG), to improve the quality of financial management and public accountability.

Annexures and Supporting Documents

• Annexure I: Resources and Trends of Expenditure in Rajasthan
• Annexure II: Budget Literature - GoR
• Annexure III: Statement of Comparison of GoR Accounts with IFAC Standards
• Annexure IV: List of Documents Reviewed
• Annexure V: List of Officials Met

Tables, Boxes, and Diagrams

• Table 1: Budget Preparation

• Table 2: Budget Approval

• Table 3: Budget Execution

• Table 4: Internal Control including Internal Audit

• Table 5: Government Accounts

• Table 6: Financial Reporting

• Table 7: External Audit

• Table 8: Legislative Scrutiny

• Table 9: Access / Right to Financial Information

• Box 1: Significant Aspects of Compliance Gap

• Box 2: Extract from Memorandum of Undertaking Government of Rajasthan and Government of India – March 2003

• Box 3: Rajasthan Fiscal Responsibilities and Budget Management Act, 2005

• Box 4: Incentivizing Compliance with Financial Management Rules: Andhra Pradesh

• Box 5: Extract from the Report of the Reserve Bank of India Group to assess the Fiscal Risk of State Government Guarantee - July 2002

• Box 6: Government of India - Duties and Responsibilities of the Chief Accounting Authority

• Box 7: Use of Public Accounts in Managing State Finances

• Box 8: Illustrative Examples of Recommendations of the CAG of India

• Box 9: Status Report on Follow Up Action on Audit Reports

• Diagram 1: Public Financial Management and Accountability System

Key Stakeholders

• Task Team Leaders: Vinod Sahgal, Manvinder Mamak
• Core Team: Dharam Vir, Girija Varma, Krishnan Srinivasan, Anup Kumar Aggarwal, Dhruba Purkayastha, D.N. Ghosh, P.K. Jain, A.K. Ojha, Suneel Dhariwal, Rakesh Hooja, Arvind Mayaram
• Supporting Organizations: ICRA LTD, Centre for Good Governance (CGG), World Bank
• Officials Consulted: Rajiv Mehrishi, S.P. Gupta, K.K. Gadeock, Vinod Pandya, Yaduvendra Mathur, G.L. Choudhary, R.S. Rathore, Sumitra Singh, S.R. Goel, S.S. Bhandari

Currency Equivalents

• 1 US$ = approx. Rs. 46
• 1 Crore = 10 million
• Rs. 1000 Crores = approx. US$217 million

Fiscal Year

• April 1 - March 31

Fiduciary and Accountability Risks

• The compliance gap significantly enhances fiduciary risk and reduces optimal resource utilization.
• The report emphasizes the need for a coordinated strategy to address these issues, with a focus on institutional reforms and capacity building.